If you’ve recently lost your job because of the pandemic, it’s probably something of a relief when that first unemployment benefit payment shows up in the mail. These days, a lot of people are opting for debit cards as their preferred form of payment since they’re convenient and can generally be used at any ATM. But that sort of “good news” didn’t really apply to one couple living in Parker, Colorado. Cari Smith and her husband went to check the mail on Saturday found they were the recipients of this form of unemployment payment. But it wasn’t just one debit card. Nor was it two of them. They found 19 of the plastic payment cards, each in its own envelope from the state. Making the story even more odd was the fact that each one was addressed to a different person, none of them being the Smiths. To top it all off, they hadn’t even filed for unemployment. You can probably guess where the story goes from there. (CBS Denver)
A couple received 19 envelopes with U.S. Bank Reliacards over the weekend at their home, each with different names listed under their address. They did not apply for unemployment leading the Colorado Department of Labor and Employment to suspect this is another example of fraud, which is on the rise during the pandemic.
“We went to our mailbox, brought out multiple envelopes, they all seem to be from the same place,” said Cari Smith. “Obviously, they’re different people.”
Smith and her husband were caught off guard by the discovery on Saturday at their home. All 19 debit cards arrived in one day, none before or since then. Neither of them has any reason to be in the database for unemployment claims so they’re concerned why their address showed up as a location for delivery.
So the Colorado Department of Labor “suspects this is another example of fraud.” Ya think? I’m not sure we really had to call in Perry Mason to figure that one out, guys.
There’s been so much of this fraud going on since the pandemic struck that it’s almost become comical. States that are normally accustomed to processing a few hundred claims per week were suddenly inundated with tens of thousands of applicants. Normal background checks went out the window as the states began simply rubberstamping the applications so they could get the payments out the door as quickly as possible. And that opened the door for hackers and identity thieves to swoop in.
As we discussed here previously, Washington State was one of the first states to be struck by the pandemic and also one of the first to see government-ordered shutdowns sending people scrambling to the unemployment lines. As a result, they were also hit with this form of fraud in a matter of weeks. Scammers from overseas were registering all sorts of people for unemployment and then taking the first payments and transferring the cash from the debit cards to overseas accounts, gift cards, or other easily ported payment devices.
In a followup to that story from John, we learned that some of the biggest culprits were from West Africa, specifically, from a group of Nigerian scammers dubbed “Scattered Canary.” Tracking them down overseas and attempting to prosecute them is a significant challenge, so most of them are simply getting away with it. They may only collect a few weeks of benefits before being discovered and having the claim canceled, but that doesn’t matter when you’re doing it to thousands of people at a time.
What struck me as odd about this case was the fact that the thieves chose the address of the Smith family to have all of those benefits sent to. In order to pull off the scam, since the payments weren’t made online, someone would have to go to the address and take the cards after the Post Office delivered them. Wouldn’t they have picked an unoccupied dwelling or at least a house where the owners are typically not home during the day? This may be nothing more than a typo on the part of the scammers, but it’s difficult to say.
Returning to the situation in Washington, the Department of Labor there paid out approximately $650 million to scammers. Since then they have managed to recover a little more than half of that, but the rest is likely just gone for good. The more distressing part of the story is that the $650 million they paid out in fraudulent claims adds up to 13% of the total claims paid during that period. That’s not an insignificant loss here or there. It’s a big chunk of their total payments.
I’ll once again point out that this crisis has exposed some critical weaknesses in the unemployment systems of many states. They are all in need of a serious overhaul before the next economic calamity strikes or we’re just going to be facing the same situations all over again.